Top 5 Hacks to Increase Your Home Loan Eligibility

With a multitude of lenders available in the market, availing home loans has become easier than before. It can help a great deal to keep abreast of the different financial institutions and the solutions they offer. When seeking a home loan, educate yourself about how to inflate your eligibility for home loans.

Here are five hacks that can help you enhance your eligibility for home loans

1. Include More Income Sources

Explore avenues to add additional income because it can ensure better loan eligibility. More income assures the lender of your capability to repay the loans. If you have any assets that can contribute an additional income, put them to use. By submitting proof of income generated through renting a house or services provided, you can increase your loan eligibility.

2. Pay off Your Existing Loans

Debt-to-Income Ratio is one of the primary factors deciding your loan amount. The percentage of money that you spend towards debt payments in a month to your gross monthly income is called the Debt-to-income Ratio.

Paying off your existing loans before you apply for a new home loan will reduce your monthly payments and result in a low DTI. This can lead to greater loan eligibility for you. Lenders prefer a lower DTI because it elevates the chances of you repaying your loan.

3. Include a Co-Applicant for Your Loan

Adding a co-applicant in your home loan application can boost your chances of availing a home loan. While taking a joint loan with a spouse or parent with a source of income, the resultant hike in the combined income can majorly improve your chances of loan eligibility.

Taking joint loans can also mean tax benefits for both borrowers. A co-applicant need not be a co-owner and can include anybody or any organization that is willing to accept liability for the loan. A co-applicant with a good credit score can also increase your loan eligibility.

Most banks and NBFCs also offer concessions in interest rates for female applicants. Women applicants also traditionally tend to have higher loan approval rates than men. Keep this in mind while deciding on a co-applicant for your loan.

4. Increase Your Credit Score

A credit score is one of the key indicators of your financial health and your propensity to pay your debts on time. A good credit score can get you a higher loan amount or lower interest rates.

To get a good credit score, there are several ways including the following

• Never default on your payments and always pay on time
• Maintain a low Credit Utilization Ratio (CUR) of a recommended one-third of your credit limit
• Consolidate your credit cards and loans
• Avoid being a guarantor for other loans
• Regularly check credit reports for errors that can negatively affect your credit score

If adding a co-applicant, check their credit score to see how it would impact your eligibility.

5. Consider Going for a Longer Tenure

Taking a loan for a longer tenure gives you more time to repay your loan. Financial institutions can find this favorable while granting you a loan. The interests can get higher when the loan duration is increased. So, go for the optimal tenure that raises your home loan eligibility without increasing your cost of borrowing by a great deal.

You can magnify your chances of loan eligibility by understanding what banks and NBFCs look for before giving out loans. Effective planning of your finances and knowledge of the process can make securing home loans a breezy process.

Hi I am Atish Nayar. I am working as freelancing agent.